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Global employment briefing: Finland, October 2015

  • Finland


    Government plans significant changes to labour legislation

    For some time the government and labour market organisations have been trying, without success, to agree on reforms to employment rights in Finland. Now, in an attempt to break the deadlock, the government has announced that it will amend existing employment legislation if no agreement is reached. The amendments proposed by the government are significant, not least because the intention is that labour market organisations will not be able to agree better terms for workers through collective agreements. Moreover, the plan is that the new law will cover matters which have previously been dealt with by collective agreements.

    The proposed changes are as follows:

    Overtime pay: The government plans to halve the level of overtime pay which is due under the Working Hours Act (605/1996) when an employee works beyond their regular working hours at their employer's request. At present, employees are entitled to one and a half times regular pay for the first two hours of overtime, rising to double the normal rate of pay for any additional hours worked.

    Sunday work: The government also plans to reduce the rates payable under the Working Hours Act for Sunday work. Sunday pay is currently fixed at double the employee’s normal rate of pay. The plan is to reduce this to 1.75 times normal pay.

    National holidays: A further proposal is that two national holidays, Epiphany and Ascension Day, should be unpaid, rather than paid, holidays. Under existing law, only Independence Day is treated as unpaid holiday and payment for other days off is dealt with by collective agreement.

    Annual leave: The new legislation, if passed, could also restrict the ability to collectively agree longer holidays than those set out in the Annual Holidays Act (162/2005).

    Sick pay: Finally, there are plans to reduce sick pay entitlements. Under the Employment Contracts Act (55/2001), employees with at least one month’s service are entitled to full pay for the first nine days of sickness absence, and a number of collective agreements exist that provide for considerably more generous sick pay entitlements. The new legislation could reduce sick pay levels so that the first day of sick leave is unpaid and the following eight days are paid at 80 per cent of normal pay.

    There is much debate as to whether the reforms conflict with the Finnish Constitution, international treaties and EU law and no doubt that debate will continue. In the meantime, negotiations are ongoing and the need for new legislation could yet be averted or its content could change. If, however, the government goes ahead with its plan to legislate then the aim is for it to take effect as and when the current collective agreements expire ie at the end of 2016 or early 2017, depending on the collective agreement.

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